How to help a jobless friend or family member

If a loved one is struggling financially, heed these tips to help

By

RuthMantell

WASHINGTON (MarketWatch) — With widespread and long-term unemployment, and underemployment, many people would like to help their struggling family and friends.

Sometimes it’s unclear how to best help those in need. Should you offer cash, a couch to crash on, or just a willingness to listen? A great starting point is to simply ask people what they need. Some answers will be surprising, and sometimes there can be a discussion about needs versus wants.

Make sure to be clear about whatever support you can provide, experts said.

“What I hear from people who have been unemployed is that family and friends offer to help, but there’s not necessarily a lot of specifics,” said Paul Donahue, a Scarsdale, N.Y.-based clinical psychologist. “For those who have lost a job what people really value are specific opportunities that might be helpful.”

Case in point: One of Donahue’s underemployed clients — she had a spell of unemployment and makes less now than she did at a prior job — would like to celebrate her daughter’s upcoming religious milestone with a party similar in scale to one already held for an older sibling. While the child’s grandparents have offered to support the event, they’ve been unclear about how much they’ll contribute. Now Donahue’s client is worried about an event that should be a source of joy.

“She has found much frustration and anxiety over what the grandparents will do to support the event,” Donahue said. “If people know that their loved one’s situation has changed, it’s helpful to be very clear and up front about what they are willing to do to help. Often in a situation like this, it’s helpful to have a specific contribution.”

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However, before offering support, make sure that you can afford the gesture, said Ric Edelman, an author and financial adviser based in Fairfax, Va.

“The biggest concern I have is when people provide support that they can’t afford to provide, and they put themselves at risk,” Edelman said. “We need to make sure that we are not placing ourselves in financial jeopardy. Just because Mom and Dad have money, that doesn’t mean they should give it to you. They may need it for retirement or medical issues.”

Also, Edelman recommended making sure that unemployed friends and family have fully exhausted all of their available resources before offering support.

Start simple

Edelman advocated noncash support, such as letting an unemployed loved one move in.

“It will avoid an otherwise significant cash burden on the donor, and by being a little bit uncomfortable for everybody it will help to incentivize people to regain their independence,” Edelman said.

If the struggling adult has children, a great way to help can be through supporting a specific need, such as helping with the children’s educational costs.

“Often adults have fewer reservations about accepting the money because it is helping their children,” Donahue said.

Plan, plan, plan

Sometimes people will need help with a single mortgage payment, sometimes much more support is required.

With careful planning, loans can be repaid, even if not in the near term. Providing clear terms, including the time period of support, is crucial, experts said. Nathan Dungan, a personal-finance expert who works with young people and adults, said support should be finite.

“Not that you want to micro-manage someone who is struggling, but if there’s no discussion about time limits or expectations, there’s a potential slippery slope. Being really honest and open about the parameters of the support early on is really important,” Dungan said.

Limiting support can also help avoid creating or perpetuating a sense of entitlement.

“A little adversity is not a bad thing. It can be really character building, particularly for young adults,” Dungan said. “When parents are always rushing in to fill a void in financial circumstances, they are contributing to magical thinking about money. You are doing them no favors by having them live in some sort of a bubble where they don’t understand the impact of their decisions.”

Outlining the terms of a loan can help lenders take steps to ensure that they are not taken advantage of. But clear terms can also help borrowers.

“It’s important for adults to still feel a sense of autonomy that they are in control of their household, and not to feel that they are beholden to family members. They can still feel a sense of control over the process,” Donahue said. “We want people to feel that they can count on us, but also that we’re trying to support them to become more autonomous and get back on their feet.”

Even the best plans can fall through, though, and experts warned that some borrowers won’t repay loans.

Stay in touch

Some of the most effective support you can provide is mining your own network, championing your struggling friends, and setting up meetings for those who are looking for work. Also, this professional support, as well as social contact like meeting for coffee or lunch to catch up, should be kept up over time, not just for the first few weeks after a lay off.

“One of the things that’s helpful for people out of work is to maintain consistent contact with friends and family. Many people are out of work for months or longer,” Donahue said. “People can become isolated and somewhat alienated from their peers. They feel like they have crossed over to this other different community where they don’t have support. People feel like their professional life is a second family and they have been cut off from that.”

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